Culture change needed to lift pioneers

Ralph Schneideman. Picture / Glenn Jeffrey

Research institutes need to change their culture if pioneering ideas are to succeed, according to the chief executive of a new business incubator.

The Bio Commerce Centre will open tomorrow in a refurbished 1920s Palmerston North dairy factory next to Massey University with space for 10 companies.

Chief executive Ralph Schneideman said competition between research institutes had discouraged cooperation and fostered a view that commercialisation was merely about licensing ideas, often to overseas companies.

Companies grown in the incubator will help retain wealth generated by local ideas by keeping the development, manufacture and servicing in New Zealand, he said. "That licensing ... leaves so much more of that wealth on the table. You take that technology and throw it over the fence and you're quite happy to get a small one-digit return on royalty on sale."

The centre has a $3 million budget for a three-year programme, after which it must be self-sustaining.

This will be achieved through taking minority equity stakes in some companies, a share of public offerings and royalties on sales above agreed thresholds.

Schneideman said the Bio Commerce Centre would focus on regional strengths within plant, animal and biological science.

The best start up enterprises from the surrounding business and research community will be selected for guidance through to commercialisation. "Our responsibility is two-fold. To support the commercialisation of research results ... and to deal with the greater Manawatu business community," Schneideman said.

Existing enterprises in need of assistance can also receive international marketing, investment and contract advice from the centre.

"Part of the reason why the centre will be effective is that it is a halfway house - a neutral environment in which scientific thinking can be exposed to business and investor thinking, and vice versa."

With experience in banking, finance and product development Schneideman said he understood the challenge ahead.

'What are the risks of this initiative not being successful ... not enough deal flows coming, not being able to see enough opportunities and finance."

Unlocking money from the New Zealand financial community is crucial. "The money is there, but in terms of start up companies and real new initiatives it's not there to the same extent as in the US or the UK."

Schneideman said more must also be done to reward entrepreneurial effort, creativity and success in New Zealand. "The model here doesn't start from that positive, it starts from the negative, which effectively, in my opinion, punishes failure."

The project to build the centre, run by the economic development agency Vision Manawatu, took more than two years to complete. Funding was provided by New Zealand Trade and Enterprise, Massey University, Palmerston North City Council and the Central Energy Trust.